Wall Street Breakfast: Weekly Highlights
Equities mostly ticked higher this past week as investors were pleased by tax progress in Washington and a strong jobs report. The Dow and S&P 500 both advanced 0.4%, closing Friday's session at record highs, but the Nasdaq slipped 0.1%. The week also saw U.S. crude oil decline 1.8% to $57.30/bbl, gold prices settle at their lowest level in nearly five months at $1,248.40/oz and the benchmark 10-year Treasury yield close unchanged at 2.38%.
Economy
"We have made the breakthrough we needed," said European Commission President Jean-Claude Juncker, declaring a long-awaited Brexit deal and the opportunity to now discuss trade arrangements. A financial settlement was agreed that was "fair to the British taxpayer" and enshrined the "special rights of EU nationals," announced Theresa May, adding a guarantee that there would be "no hard border" in Ireland.
Working against a weekend deadline, the Senate passed a stop-gap spending measure to continue funding the federal government for two weeks. The bill was then sent to President Trump for his signature. In other news from Capitol Hill, the White House said it will move forward with a massive infrastructure program in 2018.
With October's wildfires and the current blazes sweeping Southern California, this year will go down as one of the most devastating fire seasons ever for insurance losses. California Insurance Commissioner Dave Jones said YTD losses already top $10B. The fires wiped out more than $3B of market value for Edison International (NYSE:EIX) and threatened operations of companies like Snap Inc. (NYSE:SNAP) and California Resources (NYSEMKT:CRC).
A holy sell-off briefly hit the markets on Wednesday before President Trump officially recognized Jerusalem as the capital of Israel and initiated the process of relocating the U.S. embassy to the city from Tel Aviv. Arab leaders warned that the momentous shift in foreign policy could spark unrest and violence across the Middle East.
The Senate Banking Committee took two major steps toward reshaping federal financial regulations and U.S. economic policy. The panel approved the nomination of Jerome Powell as Fed Chair, then marked up a bipartisan bill to exempt small and mid-size banks from portions of Dodd-Frank. Powell is seen as a non-controversial pick and would take up the post on Feb. 3.
Stocks
Is bitcoin still "a fraud" as Jamie Dimon coined the cryptocurrency in September? Bitcoin climbed above the $19,000-level at one point during the week as money poured into the new asset class. CBOE plans to launch bitcoin futures contracts on Sunday, making it easier to bet against the cryptocurrency, but bitcoin billionaire Cameron Winklevoss still sees a market cap of trillions of dollars.
Toshiba and business partner Western Digital (NYSE:WDC) have agreed to settle a dispute next week, according to several sources, over the Japanese conglomerate's plans to sell its $18B chip unit. The deal will see Western Digital drop arbitration claims in exchange for Toshiba (OTCPK:TOSYY) allowing it to invest in a next-gen chip production line that is slated to begin in 2018.
General Electric announced plans to cut 12K jobs in its GE Power unit, about 20% of the division and around 4% of the company's overall workforce of 295K employees. GE said the layoffs were part of its initiative to slash $3.5B in structural costs in 2017 and 2018, including a $1B cost-cutting plan in 2018 by GE Power.
CVS Health acquired Aetna (NYSE:AET) for roughly $69B in cash and stock, creating the first healthcare triple threat that will combine pharmacy, benefit manager platforms and insurance. CVS's deal comes as insurers are under pressure to lower medical costs, and retailers are under attack from new competitors.
Disney restarted more serious discussions to buy some assets from 21st Century Fox (NASDAQ:FOXA), but Comcast (NASDAQ:CMCSA) remains in the mix. Many rumors are still surrounding the potential transaction, and what role Fox management would play, as well as the future of Disney (NYSE:DIS) CEO Bob Iger.
